Actually quite a few breweries bypass distributors all the time and sell direct legally. There are states which allow this. As an example Pizza Port and Three Floyds apparently exchange kegs from time to time. Because both are self distributing, it isn't a problem.

There is a lot of law variation from state to state as to what is and is not allowed primarily being driven by the United States' puritanical masses and rent seeking beer distributors protecting their position.

Click to expand...

Technically they're not bypassing distributors. If they're self-distributing, they have to set up a distribution arm, jumping through all the legal hoops required to do so. The distribution company they set up may very well wind up distributing other beers, like Stone's does.

Wrong, there is nothing capitalistic about the three tiered system. If the industry truly worked within a capitalistic system the breweries, or makers of goods, would be free to sell to whomever they wished. There would be no control over their distribution rights. They would then be free to self distribute or use a private distributor. Distributors wouldn't be dictating the laws. And In this scenario the breweries would be emboldened with the power and the free market would actually be at work. Which means better competition and a more favorable outcome for both the producers and end consumers.

Click to expand...

You're confusing capitalism with free market. Pretty much all commerce is, at best, an imperfectly free market. Some industries in the U.S. are more imperfect than others.

Beer Trader

a little side bar that i didn't know til i started working at a brewery. we don't know where our beer goes once distribution comes and picks up. if we ship 50 cases we can't say alright guys 10 are going here, 5 are going here, 2 are going here, etc. it just goes out and then distributors take care of the rest. we can specify certain things, like these 2 kegs go to this restaurant and what not, but 99% of the beer we send out we have no idea where it goes exactly (who gets what). basically don't blame breweries cause this place or that place didn't get enough of your beer cause chances are it's out of our hands

In Michigan, breweries can make suggestions to distributors, but the distributor usually has final say where the beer goes.

I don't mind the 3-tier system, but it needs revisions. Below are a few that come to mind:
--Self-distribution is not legal for breweries in Michigan, but legal for wineries. If a brewery produces less than X amount of barrels, they should be allowed to self distribute, especially if wineries can.
--In Michigan, if a brewery isn't happy with it's distributor, they are out of luck. There is no easy way out. The outdated law protects dozens of distributors, while leaving thousands of stores and breweries with no protection.
--In Michigan, distributors have territorial rights (monopoly) for each county; IE. A store can only buy Beer X from Distributor Y in County Z. Where is the capitalism in that? If Distributor Y doesn't carry a certain beer, the store should be allowed to buy it from another distributor. Consumers have hundreds of stores to choose from, but retailers have 1 distributor to choose from for each brewery.

Beer Trader

Technically they're not bypassing distributors. If they're self-distributing, they have to set up a distribution arm, jumping through all the legal hoops required to do so. The distribution company they set up may very well wind up distributing other beers, like Stone's does.

Click to expand...

Not necessarily. It depends on state laws. Some states allow self-distribution without setting up a separate distribution company. They can just put the kegs/bottles in the van and drop them off at the bar or retailer.

Beer Trader

I work for a small Liquor store that sells craft beer. I have 4 beer distributors and only one gives me a hard time, and it would be the one with the biggest portfolio. Lets call it Company X. I understand if you don't carry the breweries core brands its hard to get the limited releases. Yes its all based on how much you sale, ive had company x managers laugh at me when I asked if I could get certain ales, because ive only sold x amount of cases a year..Compared to the Big 3 (total wine, Whole food, ABC) yes i'm no where near what they sell, so they get the limited ales. Best thing to do is be the squeaky wheel! Contact breweries, state reps and even email the distributors "craft reps" all the time. Its not guaranteed you will always get what you want but most of the time you will, but the big 3 will always win. The only thing small stores have are quick one off and special orders. Chain stores have a lot of paper work to do and it takes some time for requests to go through. So they miss more than you think, especially with imports. The only one up the big 3 have are that the breweries. The popular breweries like to allocate their limited beers to top sellers. Don't get me wrong the distributors do the same thing, but the breweries have the power over the distributors. Today I learnt that I wont be getting any of a certain beer from a local brewery because there isn't enough to go around..So its on premise only, oh wait the big 3 will be getting some...Oh the power of allocation. I have more to say, ive been dealing with this for years, but im drunk..

I work at both a beer distributor and a homebrew shop that services some of the local pro craft brewers, so I think I have a unique perspective into the interesting relationships between the components of the 'system'.

One of the biggest misconceptions I see is when people assume that craft brewers want to self-distribute and are being forced into working with a distributor. Breweries (craft and otherwise) work with distributors for the same reason most don't have a legal department...because they want to brew, not mess around with politics and numbers. I know of several breweries that successfully self-distribute and they receive the same complaints distributors do - "why can't I get X limited release?" "why isn't X in stock?" "why don't I get 1 case deliveries every day of the week?"

Most complaints are really aimed at the way the industry (and the nature of profit) is, not at the distributors. Remember that the craft world is relatively infant and most distributors and retailers are hustling to rewrite decades-old practices to accommodate it. Also, profit is always the goal, from the biggest domestic brand to the smallest nanobrewery; no one wants their kids to go to bed hungry.

This doesn't mean there aren't great people who try to balance profit with delivering everything their customers want, however...

Beer Trader

Great topic and actually something I just experienced about an hour ago. I recently became the owner of a store in SE Michigan. Well one of my first orders of business was to get a craft beer section. I'm starting off small and just offering Michigan craft at the moment. But in the week I've been here I have received a great response from the locals have been selling my stock at a decent rate. Well the first distributor I dealt with (Bud, Bells, Founders) is an awesome guy and because of my passion for beer he is willing to hook me up with special releases. Was able to get a case of Hopslam on my first order. Fantastic as it gave me something nice to market with and has earned me a good start on a craft customer base....

Click to expand...

Perhaps you could start some sort of list & have people sign it showing who wants said beers. If you get enough signatures, they may be attentive to your needs. Your customers will be happy to sign if it means a poss of you getting those beers in the future. And most craft beer drinkers love that grassroots type approach to making something work in their favor. And trust me, there IS that possibility. Or call the main office & deal with someone higher up. Don't give up! There is a guy here in KC that became a powehouse name because he markets himself similarly. He has a small store but gets as much as anyone else out here. Start a Twitter & FB & list your newest releases there too. With popularity will come buying power. And good luck!!

Beer Trader

I'm sure we all spend a reasonable amount of time on the phone looking for brew. The past couple weeks for me it's been BA Bigfoot and Sucaba. I'm lucky enough to have a profession that allows me to have pretty flexible schedule. Knowing how quickly desirable beers disappear, I try to make myself available on delivery day. This has backfired (I'm sure it has for you too) more times than I can count.

I didn't come here to complain. What I'm looking for is some education about beer distribution. In a perfect world, what steps could be put in place that would allow Store owners/buyers to accurately communicate arrival dates to their customers? How exactly does the beer ordering process work? I'm always told, "We don't know how much we're going to get OR when it's coming until it gets here. Keep calling." I'm sure this is MORE frustrating for those in the business than it is for those that aren't, since they have to field all those phone calls. Is this a problem that has a potential solution? Is this even a problem?

I work for a small Liquor store that sells craft beer. I have 4 beer distributors and only one gives me a hard time, and it would be the one with the biggest portfolio. Lets call it Company X. I understand if you don't carry the breweries core brands its hard to get the limited releases. Yes its all based on how much you sale, ive had company x managers laugh at me when I asked if I could get certain ales, because ive only sold x amount of cases a year..Compared to the Big 3 (total wine, Whole food, ABC) yes i'm no where near what they sell, so they get the limited ales. Best thing to do is be the squeaky wheel! Contact breweries, state reps and even email the distributors "craft reps" all the time. Its not guaranteed you will always get what you want but most of the time you will, but the big 3 will always win. The only thing small stores have are quick one off and special orders. Chain stores have a lot of paper work to do and it takes some time for requests to go through. So they miss more than you think, especially with imports. The only one up the big 3 have are that the breweries. The popular breweries like to allocate their limited beers to top sellers. Don't get me wrong the distributors do the same thing, but the breweries have the power over the distributors. Today I learnt that I wont be getting any of a certain beer from a local brewery because there isn't enough to go around..So its on premise only, oh wait the big 3 will be getting some...Oh the power of allocation. I have more to say, ive been dealing with this for years, but im drunk..

Click to expand...

I think it's a misconception that the squeaky wheel always gets the oil. I've worked customer service jobs (not in the beer industry), and people who get a rep as more trouble than they're worth don't get treated well.
Then again, if a beer distributor is looking for 100% placement on some item they're pushing that week, I guess that would give you some leverage.

Every state is a little different. I live and sell beer in ct. When we get seasonal beers in we can't wait to sell them to who ever wants them. We get a list every week of what is left for winter beers that we have to get rid of so we can start selling spring beers. Cheers

Click to expand...

Where in CT? Im From Ct, and travel up there every other week from baltimore

I know the distributor of Founders for the 13 counties in PA around me only get 10 cases to distribute and they're told who they're to go to. And the account won't sell them to customers, not even to people who work for that distributor and go there to buy it, knowing they have it. No wait list there or anything. The problem isn't always the first or second tier of the system.

Beer Trader

I think it's a misconception that the squeaky wheel always gets the oil. I've worked customer service jobs (not in the beer industry), and people who get a rep as more trouble than they're worth don't get treated well.
Then again, if a beer distributor is looking for 100% placement on some item they're pushing that week, I guess that would give you some leverage.

I didn't come here to complain. What I'm looking for is some education about beer distribution. In a perfect world, what steps could be put in place that would allow Store owners/buyers to accurately communicate arrival dates to their customers? How exactly does the beer ordering process work? I'm always told, "We don't know how much we're going to get OR when it's coming until it gets here. Keep calling." I'm sure this is MORE frustrating for those in the business than it is for those that aren't, since they have to field all those phone calls. Is this a problem that has a potential solution? Is this even a problem?

Click to expand...

You're a good person. We've had software custom written to update customers on ETA and arrival dates that we know about, by email. We ask our distributors to tell us those dates and they give us answers like "It depends on trucking" or "February 12th. I mean 19th. I mean March. 31st. The Fall." Yes, it is more frustrating for those in the business. I think the best thing to do is pick a good craft store and support it with all your beer buying power, and I don't mean the Big Three mentioned above. The more you buy, the more your favorite local store can buy, and if they're "with it" you have a better chance. We rely on our locals that are on BA and RB all the time, and that one label approval site, asking us, "Hey can you get this?" then we ask our distributors, who usually say "What the heck is that? How do you know about it?" and a few weeks later we have the product. Have patience. When a brewery 3 states away says something will be released on X day, give it time, it's probably released 3 states away that day, and has some travel time to get here.

They say they will send to the stores that got left out the last time, but when it gets shipped out, truck mysteriously crashes, and leaves all but six random cases of Cantillon, along with a few other goodies left for the distributor. They hand them out to their "pet" accounts, and the rest of the people that were supposed to get these beers are left in the dust.

It's illegal in every state, since it's the wholesaler or the brewery that pays the state excise tax - if a retailer buys beers either wholesale or retail in another state, the excise tax was not collected by his state. Most state ABC laws are going to specify that a licensed retailer can only buy beer from an in-state licensed wholesaler. (The District of Columbia is the one notably exception).

Click to expand...

It's always been pretty funny to me that DC is legally allowed to bootleg...

Subscriber

It's always been pretty funny to me that DC is legally allowed to bootleg...

Click to expand...

Hmm. . well, that's one way to look at it but isn't more that they have a 2.5 Tier System, with retailers allowed to act as wholesalers as long as they (wait for it....) pay the excise tax! Granted, they are doing it without the agreement of the brewery in some cases, but that apparently isn't unusual - that's how some Coors came east in their "bootleg" era, legal in-state distributors bought it out of state, paid the state ET, registered the beer, etc., and sold it legally to retailers - all against the wishes of the brewery.

They say they will send to the stores that got left out the last time, but when it gets shipped out, truck mysteriously crashes, and leaves all but six random cases of Cantillon, along with a few other goodies left for the distributor. They hand them out to their "pet" accounts, and the rest of the people that were supposed to get these beers are left in the dust.

Click to expand...

Sounds like you've got the inside scoop. Outside of not knowing about the 3 tier system (see the title of this thread).

SupporterSubscriber

I find it sneaky how the US capitol district has access to everything because of this, while the rest of us dumb subjects have to look over our shoulder when we want a drink.

Click to expand...

The area does get a good bit of variety, but everything and the obscure stuff cost will cost you an arm and a leg to drink it.

Not distributed in state, bought at retail, pay for storage, pay the tax to DC, add a little profit for the business, plus cost of living ala "everything in DC is more expensive compared to where you live" means:

Bottle of Consecration, Sanctification, Supplication $30 dollars not including tax
Bottle of Pliny Elder $15 dollars not including tax
1 Can of Surly Abbrasive or Heady Topper $8-9 dollars not including tax.
Bottle of Calumet Queen from THree Floyds $30

those are just a few examples. It's not exactly a free ride, and you're not going to find these beers even in DC on a regular basis, and certianly not in large quantities.

I bet DC's setup has a lot to do with wine more than beer. A dignitary from ABC country is flying in and only drinks X wine from this producer and plans to dine at a certain restaurant during trip. Restaurant needs wine but it is not normally distributed in DC, they find a source for it. Pay taxes. Serve it to dignitary at inflated price that is paid for by someone's tax dollars. Dignitary is kept in high spirits and agrees on deal to benefit a member of our government in DC and all is well!

If I could get Nugget Nectar 30 .miles from me, I would have 2 cases right now. Instead of waiting another week or 2

Click to expand...

Philly had it two or three weeks before Jersey. I'm 40 miles away and almost drove to get cases but ended up just waiting. I even went to Philly for a night before Jersey got nectar and saw it at the bars, but I opted for all the Bells I could get because I can't get it at home.